ESTABLISHING VIABLE AND SUSTAINABLE RURAL ECONOMIC
DEVELOPMENT PROGRAMMES IN A COMPETITIVE GLOBAL ECONOMY:
ANALYSIS OF MARULA COMMERCIALISATION IN SOUTH AFRICA
by
VUYO MAHLATI
Dissertation presented for the degree of Doctor of Philosophy in the Faculty of Economic and
Management Sciences (School of Public Leadership) at Stellenbosch University
Promotor: Prof Mark Swilling
December 2011
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DECLARATION
By submitting this dissertation electronically, I declare that the entirety of the work contained
therein is my own, original work, that I am the sole author thereof (save to the extent explicitly
otherwise stated), that reproduction and publication thereof by Stellenbosch University will not
infringe any third party rights and that I have not previously in its entirety or in part submitted it
for obtaining any qualification.
Signature: ……… Date: ………
Copyright ©2011 Stellenbosch University All rights reserved
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ABSTRACTThe historical significance of the socio-political changes in South Africa since 1994 cannot be disputed. The challenge is to place the redress agenda within a macro-framework geared to promote competitiveness that positions South Africa as a credible and valued player within the continent and globally. Of concern here is the plight of the rural poor and the neglect of rural space, viewed as central in redressing imbalances and competitiveness. This study posits that the marginalisation of the rural poor results from the deliberate, structural and systemic exclusion evident in previous regimes and perpetuated by the reigning neoliberal policies and the rural development paradigm. It provides an in-depth analysis of the rural poor’s spiral of deprivation. The spiral is viewed to perpetuate “dependent survivalism” with reliance on unsustainable hand-outs and oppressive paternalistic relationships between those with, and those without resources. The argument is that the emergence of the poverty eradication agenda has not focused attention and effort on the treatment of the causes of poverty. The study objective is to offer alternative approaches for addressing these structural constraints, enabling rural household participation in viable and sustainable rural economic development programmes. To this end transdisciplinary methods premised on the view of the household as the nucleus of sustainable development are used. The study challenges the general economic theory that limits a household to only a source of labour and capital, with emphasis on household consumption. It shifts focus from the consumptive “dependent survivalism” mode to households as owners of productive assets, producers and suppliers, termed the “productive perspective”. To achieve this, an inclusive and sustainable development conceptual framework is proposed with an alternative rural development policy perspective. The framework emphasises the deployment of capital assets and rural economic development strategies based on the theory of value chains.
The comparative analysis of marula commercialisation case studies is used to conceptualise the framework and formulate alternative approaches. Primary research focused on the Distell/Mirma Amarula Cream processing plant in Phalaborwa and the Marula Natural Products initiative at Thulamahashe, Bushbuckridge, South Africa. The findings demonstrated that marula supplying households are value chain actors with an objective function to maximise benefits and participate in the mainstream economy, but are structurally constrained. The profiles of the marula suppliers indicate that the majority are women who as heads of households bear the brunt of unpaid labour and the burden of care. The case study exposed the failure of the local and global economic systems to afford them their deserved opportunities and benefits as value chain actors. The study thus proposes a sustainable benefit-maximising system that is rooted in the value chain-based re-organisation of production, emphasising mainstreaming through institutional and systems change. The role of the state is
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emphasised as central in creating an enabling environment with regulatory frameworks that ensure sustainable resource use and sharing in value created. The study calls for the courage to turn the 2008/9 global financial crisis into an inclusive and sustainable development agenda.
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OPSOMMINGDie historiese betekenis van die sosiopolitieke veranderinge in Suid-Afrika sedert 1994 is onbetwisbaar. Vandag se uitdaging is om die regstellingsagenda in ’n makroraamwerk te plaas wat daarop gerig is om mededingendheid te bevorder en Suid-Afrika sodoende op die kontinent en wêreldwyd te vestig as geloofwaardige en waardevolle speler. Die lot van plattelandse armes en die verwaarlosing van die landelike ruimte is sentrale kwessies in die herstel van wanbalanse en mededingendheid. Hierdie studie voer aan dat die marginalisering van plattelandse armes spruit uit die doelbewuste, strukturele en sistemiese uitsluiting wat in vorige regimes voorgekom het en voortgesit word deur neoliberale beleid en die paradigma van landelike ontwikkeling. Dit bied ’n indringende ontleding van die plattelandse armes se benadeling, wat beskou word as die voortsetting van “afhanklike oorlewing”, met afhanklikheid van onvolhoubare aalmoese en verdrukkende paternalistiese verhoudinge tussen diegene met hulpbronne en diegene daarsonder. Daar word betoog dat die agenda vir die uitroeiing van armoede op die tafel geplaas is sonder dat dit die aandag en energie op die behandeling van die oorsake van armoede toegespits het.
Die doelwit van die studie is om alternatiewe benaderings te bied om strukturele beperkings die hoof te bied en plattelandse huishoudings in staat te stel om aan lewensvatbare en volhoubare ontwikkelingsprogramme vir die landbou-ekonomie deel te neem. Hiervoor word transdissiplinêre metodes aangewend wat voortbou op die siening van die huishouding as die kern van volhoubare ontwikkeling. Die studie betwis die algemene ekonomiese teorie wat ’n huishouding tot ’n blote arbeidsbron reduseer en kapitaal aan verbruik vasknoop. Die fokus word dus verskuif van “afhanklike oorlewing” na die huishouding as eienaar van produktiewe bates, en as produsent en verskaffer, te wete die “produktiewe perspektief”.
Die primêre navorsing is toegespits op Distell/Mirma Amarula Cream se verwerkingsaanleg in Phalaborwa en die Marula Natural Products-projek in Thulamahashe, Bosbokrand, Suid-Afrika. Die maroela-gevalstudie het die nood van huishoudelike produsente en verskaffers blootgelê tesame met die onvermoë van plaaslike en wêreld-ekonomiese stelsels om hulle die geleenthede en voordele as waardekettingspelers te bied wat hulle toekom. Die profiele van die maroelaverskaffers toon dat die meerderheid vroue is wat as huishoofde die las van kwesbaarheid, onbetaalde arbeid en versorging moet dra. Die navorsing se ontleding het ook die sleutelelemente uitgewys vir die verbetering van prestasie en voordele aan die arm verskaffers sonder dat die lewensvatbaarheid en volhoubaarheid van ondernemings ingeboet word.
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Die gevolgtrekking van die studie is dat behoorlik uitgewerkte en ondersteunde programme vir plattelandse ekonomiese ontwikkeling die handelsgeleenthede van natuurlike hulpbronne kan maksimaliseer vir bedryfsgroei en voordele vir plattelandse gemeenskappe. ’n Alternatiewe, volhoubare stelsel vir die uitbou van voordele word dus voorgehou wat gesetel is in die reorganisasie van produksie volgens waardekettings, met die klem op hoofstroming deur institusionele en stelselverandering. Die rol van die staat is sentraal in die skepping van ’n bemagtigende omgewing, met reguleringsraamwerke wat volhoubare hulpbrongebruik en waardedeling verseker. Die studie bepleit moedige optrede om die wêreldwye finansiële krisis van 2008/9 om te skep in ’n inklusiewe en volhoubare ontwikkelingsagenda.
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ACKNOWLEDGEMENTS
The presentation of this thesis signifies a critical milestone in my life. As a daughter, sister, wife, makoti, mother, aunt, activist, professional, community member, and African, fitting in a student identity has been a challenge. However, it is because of these identities and roles that this exercise has been possible. Of great value is the wisdom and support drawn from all those who form part of my nexus. I shall forever remain indebted to all of you. You have brought meaning to the concept of ubuntu. I truly am, because you are.
A special acknowledgement goes to my supervisor, Professor Mark Swilling from the School for Public Management and Planning. His pioneering work on sustainable development and transdisciplinary approaches has given me the courage to go beyond disciplinary boundaries. This extends to my fellow PhD Colloquium participants for creating space for exploratory learning and sharing.
I wish to express my sincere gratitude to the women of Bushbuckridge who shared their stories – their lives, dreams, sorrow, and hopes – during interviews and focus groups. Acknowledgement goes to the management of both Marula Natural Products (MNP), and the Phalaborwa-based Amarula Lapa and Processing Plant for helping with relevant information and sharing their views. The student enumerators who assisted with interviews are thanked, with special recognition of Dr. Joseph Francis for assisting with induction and evaluation of the research process at Thulamahashe.
I whole-heartedly dedicate this PhD to my late father who died on 8 February 2010. My mother and mother-in-law are thanked for their continued support and understanding. I also wish to express my sincere gratitude to my business partners and support staff. A special mention and expression of appreciation goes to two people who challenged and inspired me to make this humble contribution to knowledge. They are Mama Zanele Mbeki (for deepening inquiry) and Nancy Gordon (for teaching me the “art of intergenerational trespassing”). To Gil (my husband), Lilitha (daughter) and Siseko (son): you have been my pillars of strength.
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TABLE OF CONTENTS CONTENTS PAGE DECLARATION……….. . II ABSTRACT……….. . IIII OPSOMMING……….. . V ACKNOWLEDGEMENTS……….. VIITABLE OF CONTENTS………. VIII
LIST OF FIGURES………. . XIII
LIST OF TABLES………... XIII
LIST OF BOXES………. . XIIV
LIST OF ACRONYMS……….... XIV
CHAPTER 1: INTRODUCTION
1.1 BACKGROUND……… 1
1.2 STUDY OBJECTIVES……….. 3
1.3 SIGNIFICANCE OF STUDY……… 4
1.3.1 Relevance and Intended Contribution……… 4
1.3.2 Background and Significance of the Marula Case study. 5 1.4 LOGIC AND SUMMARY OF ARGUMENTS………..………. 7
1.4.1 Background on Logic………... 7
1.4.2 Key Assumptions………. 9
1.5 DEFINING KEY CONCEPTS AND SCOPE……… 13
1.6 PERSONAL STORY………... 18
1.7 THESIS OUTLINE………. 20
1.8 CONCLUSION……… 22
CHAPTER 2: RESEARCH STRATEGY & METHODOLOGY 2.1 INTRODUCTION……… 24
2.2 METHODOLOGY ……….. 25
2.2.1 Qualitative Research……….. 25
2.2.2 Transdisciplinarity………. 27
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2.3 METHODS………. 30
2.3.1 Secondary Data Collection ………. 30
2.3.2 Sampling ………. 31
2.3.3 Primary Data Collection: Marula Enterprises ……… 35
2.3.4 Methods for marula supplying households………. 39
2.4 PRIMARY DATA ANALYSIS………. 43
2.5 THE TRANSDISCIPLINARY DATA FRAMEWORK ………. 44
2.6 VALUE CHAIN-BASED METHODOLOGICAL APPROACH ……… 47
2.6.1 The Value Chain System………. 47
2.6.2 The Value Chain Technique……… 48
2.7 VALUE CHAIN-BASED COMMERCIALISATION……… 48
2.8 CONCLUSION………. 50
CHAPTER 3: REVIEWING THE RURAL DEVELOPMENT PARADIGM 3.1 INTRODUCTION……… 51
3.2 BACKGROUND ON RURAL DEVELOPMENT CONCEPTIONS... 51
3.3 THE MEANING OF RURAL AND THE SPATIAL DIMENSION …. 52 3.3.1 Defining Rural: What Characterises Rural Areas?... 54
3.3.2 The Spatial Dimension of Rurality………. 57
3.4 CHALLENGING THE DEVELOPMENT GOAL ………. 59
3.4.1 Rural Synonymous with Poor……… 60
3.4.2 Growth as Development………. 61
3.5 “AGRICULTURALISATION” OF RURAL DEVELOPMENT ………. 64
3.6 THE MACROECONOMIC FRAMEWORK AND THE HOUSEHOLD PRODUCTIVE PERSPECTIVE………. 68
3.6.1 Background on the Household Productive Perspective…… 70
3.6.2 Unpacking the Theoretical Framework………. 71
3.7 RURAL DEVELOPMENT THEORETICAL FRAMEWORK………. 75
3.7.1 The Link between Industrialisation and Rural Development... 77
3.7.2 Rural Development and Poverty………. 77
3.7.3 Rural Development and Structural Adjustment Policies…….. 78
3.7.4 Rural Development and Sustainable Livelihoods Approach… 78 3.8 CONCLUSION……….. 81
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CHAPTER 4: SOUTH AFRICAN CONTEXT: A HISTORICAL PERPECTIVE OF THE POLITICAL
ECONOMY
4.1 INTRODUCTION……… 82
4.2 BACKGROUND TO THE POLITICAL ECONOMY……….. 82
4.3 THE COLONIAL ECONOMY……….. 85
4.3.1 Background to the Economic Structure and System …….. 85
4.3.2 The Destructive Prosperity……… 88
4.4 SOUTH AFRICA’S DEVELOPMENT FRAMEWORK ……….. 94
4.5 SOUTH AFRICA’S RURAL DEVELOPMENT INITIATIVES ………… 96
4.5.1 The Integrated Sustainable Rural-Development Strategy….. 97
4.5.2 The Comprehensive Rural Development Programme……… 98
4.6 CONCLUSION……….. 102
CHAPTER 5: MARULA CASE STUDY FINDINGS 5.1 INTRODUCTION……….. 104
5.2 THE PROFILE OF THE MNP MARULA SUPPLIERS……… 105
5.2.1 The Spatial Dimensions……… 106
5.2.2 Marula Supplier Livelihood Patterns……… 110
5.2.3 Respondent’s Perspectives on Rural Household Roles…….. 112
5.2.4 Marula Supplying Households and Self Employment……….. 114
5.3 FINDINGS: MARULA COMMERCIAL ACTIVITY………. 116
5.3.1 Description of the Marula Commercial Activity……….. 117
5.3.2 Comparative Analysis of Commercialisation Strategies…….. 118
5.4 THE MARULA PRODUCTIVE PROCESS………. 122
5.4.1 Amarula Cream……… 123
5.4.2 Swazi Secrets………. 124
5.4.3 Marula Natural Products……… 126
5.5 THE TRADITIONAL INFORMAL HOUSEHOLD PRODUCERS …….. 129
5.5.1 Role in Marula Marketing System……… 130
5.5.2 Socioecology of Marula……….... 132
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CHAPTER 6: RETHINKING RURAL ECONOMIC DEVELOPMENT: CONCEPTUAL
FRAMEWORK AND ALTERNATIVE APPROACHES
6.1 INTRODUCTION………. 134
6.2 TOWARDS A NEW WAY OF THINKING ……… 135
6.2.1 An Inclusive and Sustainable Vision ……… 135
6.2.2 Building on Indigenous Knowledge………... 137
6.2.3 Promoting a “Productive Perspective”……… 139
6.2.4 The Gender Dimension……… 140
6.3 RESTRUCTURING THE ECONOMIC SYSTEM FOR SUSTAINABLE MAINSTREAMING OF RURAL HOUSEHOLD PRODUCERS ……… 143
6.3.1 Restructuring the Market Economic System………. 144
6.3.2 The Social Enterprise Commercial Strategy………. 148
6.3.3 The Integrated Conservation and Development………. 150
6.4 LESSONS FROM AGRO-FOOD SECTORS………. 153
6.5 CONCLUSION………... 157
CHAPTER 7: IMPROVING ECONOMIC PERFORMANCE AND BENEFIT FOR THE RURAL POOR: VALUE CHAIN-BASED INTEGRATED SUPPLY CHAINS 7.1 INTRODUCTION……….. 159
7.2 THE TRANSFORMATIVE INDUSTRIAL STRATEGY……… 159
7.2.1 Background……… 160
7.2.2 Definition of Terms and Theoretical Background……… 162
7.3 THE DISTELL CASE STUDY………. 163
7.4 THE STORY OF AMARULA CREAM……… 163
7.4.1 Competitive Positioning of Amarula Cream……….. 164
7.4.2 Distell Business Strategy………. 165
7.5 THE WINE INDUSTRY IN SOUTH AFRICA……… 168
7.6 REVIEW OF MARULA SUPPLY CHAIN INSTITUTIONS……… 169
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7.7.1 Institutional Framework……… 173
7.7.2 The Role of Value Chains in Industry Restructuring………… 174
7.7.3 Marketing Channel Mainstreaming………. 177
7.7.4 Using Competitive Integrated Supply Chains……… 178
7.7.5 Creating an Enabling Environment……….. 180
7.8 CONCLUSION………. 181
CHAPTER 8: SUMMARY AND CONCLUSION 8.1 INTRODUCTION……… 183
8.2 SUMMARY OF FINDINGS AND ALTERNATIVE APPROACHES 183 8.3 LIMITATIONS OF METHODOLOGY………. 187
8.4 RECOMMENDATIONS……… 189
LIST OF REFERENCES……… 195
ANNEXURE 1: QUESTIONNAIRE………. . 249
ANNEXURE 2: MARULA PICTURES………. 262
LIST OF FIGURES Figure 1: The Spiral of Deprivation………. 9
Figure 2: Thesis Outline………... 21
Figure 3: The Transdisciplinary Research Framework……… 28
Figure 4: Bohlabela District Municipality, Limpopo Province ………… 32
Figure 5: MNP Marula Supplier Structure ……… 34
Figure 6: The Commercialisation Process ……… 38
Figure 7: The Transdisciplinary Thematic Structuring Process ……… 45
Figure 8: The Value Chain System ……….……… 47
Figure 9: Marula Fruit ……… 49
Figure 10: South African Population by Region ………... ……… 53
Figure 11: Population Distribution ……….. 54
Figure 12: South Africa’s Household Amenities by Region ………. 56
Figure 13: The Integrative Synthesis ……… 64
Figure 14: South Africa’s Rural Development Strategy ……… 65
Figure 15: Rural Population and Agricultural Employment ……….. 66
Figure 16: South Africa - Employment by Sector ……….. 67
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Figure 18: Rural Development Ideas Timeline ………. 76
Figure 19 Sustainable Rural Livelihood Framework………. 80
Figure 20: Main Bantu Political and Language Groups of South Africa… 91 Figure 21: Marula Supplier Household Basic Services ……… 107
Figure 22: Telecommunication and Transport Services ……….. 108
Figure 23: Household Communication Penetration, 2007 ……… 109
Figure 24: MNP Supplier Income Sources ……… 110
Figure 25: Bushbuckridge Marula Suppliers’ Level of Reality …………. 113
Figure 26: Marula Supply Chain ………. 116
Figure 27: Limpopo/Mpumalanga Marula Commercial Activity………… 117
Figure 28: Marula Industry Subsectors ……… 118
Figure 29: Commercial Market Channels in the Marula Industry ……… 121
Figure 30: The Traditional Household Producer as a Value Chain Actor 130 Figure 31: The Inclusive and Sustainable Development Framework …… 136
Figure 32: Alternative Rural Development Perspective ……….. 142
Figure 33: Alternative Rural Economic Development Strategies ………. 144
Figure 34: Market-based Ecosystem ……… 145
Figure 35: Restructured Market Economic System ……… 147
Figure 36: Social Enterprise Commercial Strategy ……… 150
Figure 37: Demand-driven and Inclusive Marula Industry Framework… 161 Figure 38: Amarula Cream Business……….. 164
Figure 39: Amarula Cream Relations……… 170
Figure 40: Integrated Supply Chain……… 179
Figure 41: The Rural Household “Productive Perspective”……… 187
LIST OF TABLES Table 1: Themes of qualitative inquiry ………... 27
Table 2: Transdisciplinary Research Activities ……… 29
Table 3: Marula Interview Format ……….. 36
Table 4: Shifts in the Organisation of Production ………. 69
Table 5: Educational Levels at Bushbuckridge ………. 110
Table 6: Marula Commercialisation Strategic Groups ………. 119
Table 7: Status on Channel Performance ……….... 122
Table 8: Rural Households as Value Actors in the Marketing System… 131 Table 9: Meanings of land ………. 137
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Table 10: Rural Employment Gender Status……… 141
Table 11: Rural space as competitive space and ‘battleground’ between the conventional and alternative agri-food systems ………… 155
LIST OF BOXES
Box 1 Income Generation Differentiation………. 115
Box 2: Forms of Capital ………. … 136
LIST OF ACRONYMS
ANC African National Congress
AU African Union
AMPS All Media and Products Survey
BBSDP Black Business Supplier Development Programme BBBEE Broad Based Black Economic Empowerment
CBO Community-Based Organisation
CBNRM Community Based Natural Resource Programme CBPWP Community-Based Public Works Programme CIDA Canadian International Development Agency Cosatu Congress of South African Trade Unions CPPP Community Public Private Sector Partnership CRDP Comprehensive Rural Development Programme CSIR Council for Scientific and Industrial Research DBSA Development Bank of Southern Africa
DEAT Department of Environmental Affairs and Tourism DFI Development Finance Institutions
DFID Department for International Development, United Kingdom
DLA Department of Land Affairs
DPLG Department of Provincial and Local Government DPW Department of Public Works
EAP Economically Active Population
EE Employment Equity
EU European Union
ECLA Economic Commission for Latin America EMIA Export Marketing and Investment Assistance ESOP Employee Share Ownership Programme
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EPWP Extended Public Works Programme
FIG Foreign Investment Grant
GDP Gross Domestic Product
GEAR Growth, Employment and Redistribution
GNP Gross National Product
GPI Genuine Progress Indicator
HDI Human Development Index
HDIs Historically Disadvantaged Individuals
HDR Human Development Report
HIV/AIDS Human Immune deficiency Virus/Acquired Immune deficiency Syndrome
HRD Human Resources Development
HSRC Human Science Research Council
ICT Information and Communication Technology IDC Industrial Development Corporation
IDT Independent Development Trust
IDZ Industrial Development Zone
IES Income and Expenditure Survey
IIED International Institute for Environment and Development ILO International Labour Organization
IMS Integrated Manufacturing Strategy ISEW Index of Sustainable Economic Welfare
ISRDS Integrated Sustainable Rural Development Strategy
JSE Johannesburg Stock Exchange
LDC Least Developed Countries
LED Local Economic Development
MDG Millennium Development Goals
MTEF Medium-Term Expenditure Framework NDA National Department of Agriculture NEPAD New Partnership for Africa’s Development
NIE New Institution Economics
NFSD National Framework on Sustainable Development NGM National Gender Machinery
NGOs Non-governmental organizations NIPF National Industrial Policy Framework
ODA Official Development Assistance
OPEC Organization of the Petroleum Exporting Countries PCAS Policy Coordination and Advisory Services
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PRA Participatory Rural Appraisal
PPPFA Preferential Procurement Policy Framework Act PPP Public Private Partnerships
PRP Poverty Relief Programme
RDP Reconstruction and Development Programme SACU Southern African Customs Union
SADC Southern African Development Community SARB South African Reserve Bank
SARPN South African Regional Poverty Network SAWID South African Women in Dialogue
SDC Swiss Agency for Development Cooperation SMME Small, Micro and Medium Enterprise
SOE State-Owned Enterprise
StatsSA Statistics South Africa
DTI Department of Trade and Industry
UNDP United Nations Development Programme
UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund
UNIDO United Nations Industrial Development Organisation UNIFEM United Nations Development Fund for Women USAID United States Agency for International Development
WDR World Development Report
WEF World Economic Forum
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CHAPTER 1INTRODUCTION
1.1 BACKGROUND
Like most countries worldwide, South Africa is battlingto survive the global economic recession that has resulted into the world economy declining with massive job losses and contraction of world trade (Spence & Leipziger 2010, UN 2009). Of interest here is the impact of the global economic system on the rural economies in developing countries, and prospects for rural household economic participation. The 2009 UN World Economic Situation and Prospects report indicates that
Developing countries will be hurt by the crisis through international trade and finance channels. The drop in commodity prices will hurt primary exporters in particular, but lower demand in the developed countries will affect export growth throughout the developing world (2009:21). The devastating impact of the 2008 global crisis was sparked by the credit crunch in Western countries leading to the collapse of major banking institutions, with an economic downturn that commenced in the developed nations. This affected developing economies, with serious implications for the rural poor (UN 2009; Bond 2008; Mahlati 2009). Delivering his 2010 Budget Speech, the South African Minister of Finance referred to the crisis as the deepest recession in over 70 years. He pointed out that
...after five years of strong growth, during which about two million jobs were created, our economy shrank by an estimated 1,8 per cent last year. Mining output fell by about 7 per cent, manufacturing by over 12 per cent. Consumption and private investment contracted. About 900 000 people lost their jobs (Gordhan 2010:5).
The Statistics South Africa (StatsSA) Quarterly Labour Force Survey for 1st quarter in 2010 indicates that employment decreased by 171 000 with the numbers of persons in the labour force decreasing slightly by 25 000 between the last quarter of 2009 and the first quarter of 2010. Of further importance is that the number of unemployed persons increased by 145 000 of which 113 000 were women and 33 000 were men (StatsSA 2010).
The country has, however, benefitted from years of fiscal discipline and financial sector regulation post-apartheid. It has shown immense resilience in the face of the brutal global financial crisis (Gordhan
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2010, PCAS 2008a1). Notwithstanding these efforts, poverty and unemployment persist. Of concern to this study is the goal and direction of the rural development agenda, and the national and global macroeconomic frameworks that are viewed to impact negatively on the rural poor population and space. The latter includes natural resource depletion, inequitable distribution of resources, and the undervalued rural people and space. This is evident in the continuing underdevelopment of rural locations with insufficient capital flows, especially to rural areas where poor rural households reside. Reports by Allan and Heese (2008) highlight the inequalities between rural and urban municipalities and their impact on productivity.
The Presidency report on Development Indicators (PCAS 2008a) acknowledges the problem of poverty and inequality. It points to the widening gap between the rich and the poor with the income of the richest 10% of the population increasing at a faster rate. It also shows the deep structural nature of poverty with a racial underpinning when the percentage income of the richest and the poorest quintiles are compared. The study commences by explaining the logic and arguments behind the research topic and problem to direct the expansion of relevant scientific knowledge in the research process. Literature review was used to determine the theories relevant for exploring the driving questions and assumptions. As this is a qualitative study the use of theory has been varied with the beginning chapters assisting to provide a lens that shapes the research strategy. Theory further provides a broad explanation for variables, constructs and themes throughout the thesis (Creswell 2009). The researcher also used the State’s policy documents and reports as a basis of inquiry and proposed change. This primarily focused on the development trajectory relevant to rural economic development, as well as transformation of the historically disadvantaged people and institutions. These include the Department of Trade and Industry’s (DTI 2006) transformation agenda encapsulated in South Africa’s Economic Transformation: A Strategy for Broad-Based Black Economic Empowerment, stating that
Our country requires an economy that can meet the needs of all our economic citizens – our people and their enterprises – in a sustainable manner. This will only be possible if our economy builds on the full potential of all persons and communities across the length and breadth of this country. Government’s objective is to achieve this vision of an adaptive economy characterised by growth, employment and equity by 2014 (DTI 2006:4).
The focus of analysis is on whether the developmental trajectory, societal institutions, and socio-economic and ecological systems are adequately configured and aligned to ensure the achievement of
1 According to the 2008 Presidency Report, the 2007/2008 budget surplus was 0,8% of GDP from 0,3% surplus in 2006/2007. At the same time, expenditure by government in economic, social and other areas increased in real terms.
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transformation goals. The study uses a transdisciplinarity2 approach to tackle these complex issues. This recognises the complexity and cross-cutting nature of the study problem and the recognition that it cannot be adequately tackled from the sphere of specific individual disciplines (Max-Neef 2005). Qualitative case study methods focusing on the analysis of marula commercialisation in South Africa are used to achieve this. According to Soy (1997) case study research excels at bringing us to an understanding of a complex issue or object and can extend experience or add strength to what is already known through previous research. The use of the method in this thesis draws strongly from Yin (1984, 2003 and 2009) who views a case study as a story about something unique, special, or interesting. This chapter sets the scene for an academic inquiry, by highlighting the study objective, the significance of the study, defining key terms and providing the thesis outline.
1.2 STUDY OBJECTIVE
The main problem addressed here relates to the current macro-environment with its socio-economic institutions and systems that do not enable the rural poor to effectively participate in, and benefit from, economic development programmes. The focus is on the prevailing conceptions of rural development, in particular the underlying assumptions about the nature of rural households, household production and the wider connections into the macroeconomic framework.
The objective is to make an original contribution to knowledge through evidence-based research by offering an inclusive and sustainable development framework with alternative rural economic development strategies, based on the theory of value chains, for mainstreaming rural household producers into a competitive global economy. This is done through:
understanding, describing, analysing and challenging current theories, policies and practices so as to introduce a new way of thinking that centralises poor rural households within an inclusive and sustainable conceptual development framework;
transcending disciplines, academic territories and fields (as well as “turfs”) in order to develop a rural development policy perspective that goes beyond the current limitations in the literature; providing alternative rural economic strategies using the marula case study to:
2 Transdisciplinarity is discussed in more detail in chapter 2. Nicolescu (2002), a strong proponent, views it as a
vision with life-long learning and the study of the universal. He believes that it is nourished by disciplinary research; and in turn, disciplinary research is clarified by transdisciplinary knowledge in a new, fertile way.
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o analyse the relevance of value chain approaches in mainstreaming rural household producers as value chain actors, building on their social networks, traditional knowledge and existing industry structures;
o examine marula commercialisation strategies to unpack the complex
human-environment systems critical for sustainable resource use and benefit maximisation.
1.3 SIGNIFICANCE OF THE STUDY
The discussion on the study significance covers the rationale and relevance, highlighting the strategic approaches used to validate the problem and provide alternative perspectives for the rural people and space.
1.3.1 Relevance and Intended Contribution
This study focuses on the structural and institutional factors constraining rural South Africa and highlights the impact of the national and global macro-frameworks on the underdevelopment of the rural poor. However, it goes beyond “problematising” frameworks, and offers solutions for establishing inclusive, value chain-based rural economic development programmes. The focus is on unpacking the structural constraints contributing to the marginalisation of the rural poor in general. The case study methodology is used to specifically demonstrate the exclusive and exploitative nature of the rural economic strategies. The contention is that the post-apartheid redress agenda has not addressed the fundamental issues relevant for structural and systemic integration. New industries with potential to benefit rural households blindly follow the dualistic and inequality-perpetuating rural economic strategies with exploitative institutional arrangements. The broader concern is the rural economy still characterised by unsustainable exclusive dependence on the export of primary products, absence of an industrial base, weak savings and investments, and limited profit-earning capacity of capital, as well as under-serviced basic and social needs (health, education, and social welfare) (Hugon 2004). Central are the spatial dimensions of economic development (urban-biased) and the link between micro and macropolicies.
Worth noting is that the study topic’s reference to rural economic development is not narrowly confined to the agricultural economy The study recognises that rural economics and the design of rural policies to achieve rural development constitute a broader subject than agricultural economics, with a spatial as opposed to just a sectoral perspective. Critical also is that the elementary unit of analysis is the household, with the farm treated as a typical subset of economic activity (de Janvry et al. 2002). Of significance as well is the use of the marula case study to unpack the complex structural and systemic constraints responsible for the exclusion of the rural households with valuable production potential. The
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study focuses on how poor rural households (owning potentially valuable natural resources, indigenous knowledge and labour), can strategically use commercialisation to secure sustainable livelihoods and prosper as industry players in the mainstream market economy. To this end, the marula primary research (methodology in Chapter 2, findings in Chapters 5-7) analyses the commercialisation approaches and strategies of three marula enterprises. These are the private sector-funded and driven Distell Amarula Cream (Phalaborwa-based processing plant in Limpopo Province), donor-funded and non-governmental organisation-driven Marula Natural Products (Bushbuckridge, Mpumalanga Province), and the state-initiated Swazi Secrets (Mpaka, Swaziland, with state funding and donor support).
1.3.2 Background and Significance of the Marula Case study
The selection of the marula commodity considered its commercial value, rural household participation, contribution to the rural economy and the complex human-environment systems for sustainability. Of further interest were the pre-industrial traditional production systems that are still prevalent in rural South Africa typical of traditional peasant economies. Marula also highlights the important socioecological and gender aspects of rural economic development. As a research case study it provides space for the use of scientific methods for the analysis of the economic activity, human action, territory and structuration deemed relevant for economic participation and development. It also builds on the emerging trend of applying transdisciplinary case studies as a means of sustainability learning towards sustainable development ((Scholz, Lang, Wiek, Walter and Stauffacher 2006. Kates & Dasgupta 2007; Burns & Weaver 2008).
Marula, or Sclerocarya birrea subsp. caffra, grows prolifically in a belt that stretches across the lowveld from Northern KwaZulu-Natal, across Mpumalanga, Limpopo, and North-West, as well as most parts of the Southern African region (Botswana, Mozambique, Namibia, Swaziland, and Zimbabwe). This valuable natural resource escaped colonial agricultural production systems as it was never industrialised into orderly and machined plantations and processing plants. It continues to grow wild and is found across many of the poorest areas in Southern Africa. The marula tree (referred to as morula in Botswana) has been called the king of African trees, with its fruit, nuts and bark prized by Africans for centuries. The tree has cultural and ritual importance, inducing fecundity and contact with ancestral spirits. The marula socioecology (complex human-environment co-existence) depicts its uniqueness, as articulated by Shackleton and Shackleton (2002)
Indeed, there are few wild species that demonstrate such a wide range of uses nor such a significant position in local culture. Marula provides fruits that can be eaten whole, made into juice or jam or brewed into beer; the kernels form an important food supplement and the oil
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extracted from them has many uses; the bark and leaves have medicinal properties; and the wood is used for a variety of purposes including carving and fuel wood. The tree is also host to a range of edible caterpillars and larvae as well as parasitic mistletoes which produce outgrowths known as wood roses which are sold in the curio market (2002:1).
For thousands of years, celebrations in Southern Africa would not have been complete without marula beer. In Swaziland, the marula (maganu) harvest is still a huge annual national event with women brewing beer for Her Majesty the Queen Mother with celebrations at Ebuhleni Great Place. However, the marula commodity has progressed in recent years from just subsistence and cultural use to commercial value. These developments include the emergence of Amarula Cream produced by Distell in South Africa, which is the most successful example of marula commercialisation thus far. The product was judged the best cream liqueur in the world in the 2007 and 2008 International Wine & Spirit Competition in London. According to the Media Club South Africa website (2009) the judges stated that “[t]he exotic marula aroma is abundantly clear on the nose with delicate spice in the back ground and hints of chocolate and coffee”. The marula ingredient for the Cream comes from the flesh of the marula fruit. Commercialisation has now been extended to other parts of South Africa, Namibia, Botswana, Zimbabwe and Swaziland. The 1990s/2000s innovations include other marula flesh by-products (juice, jam, food seasoning, etc.). These have attracted mainly small/micro operators with household and community-based production, some of whom are NGO-driven with donor support.
Among the recent marula commercial innovations are the kernel-extracted products with primary production (nut-cracking) that is predominantly household-based. The IUCN-NATPRO report (2004:33) indicates that approximately 2000 households in South Africa were engaged in commercial trade in marula products, earning approximately ZAR1,1 million (US$170 000) as a result. This is said to have provided about 10% of the households’ annual income. The report highlights that in 2002, around 3000 rural members of the Eudafano Women’s Cooperative of Namibia earned about US$100 000 from the sale of marula kernels. The cost-benefit of this labour-intensive activity is, however, questionable considering the amount of effort involved. Chapters 5 to 7 discuss these issues in more detail.
Significant here is that the primary marula research focuses on rural household production, which is distinct from smallholder farming. The rural household production referred to here recognises diverse farming and non-farming economic activities that utilise household assets (including family labour) for income generation and wealth creation, leveraging communal resources and social networks (Mendola 2007). The smallholder or small-scale farmer is limited to agricultural production - growing crops and/or raising livestock on small plots of land (Machethe, Reardon & Mead 1997; Agra 2008). Worth noting is that the rural household producer/supplier is more often also a smallholder farmer. The study sample targeted marginal, survivalist rural households engaged in traditional economic practices. These
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households with low levels of literacy use traditional and indigenous knowledge to survive, seeking to benefit from their poorly-managed ecosystem and imperfect markets.
The study points to marula supplying households that depict the life of peasant households. Hunt (1991) in Mendola (2007) identifies peasant farms as both production and consumption units. A proportion of their produce is sold to meet their cash requirements and financial obligations, and a part is consumed by them. According to Mendola, these units involve a variety of market and nonmarket tasks such as agriculture, pastoralism, fishing, crafts and gathering (fruits, nuts, fuel wood, water. etc.). They have to work with developing markets that function sporadically and somewhat disconnectedly across locations and time (Mendola 2007:50).
1.4 LOGIC AND SUMMARY OF ARGUMENTS
This section highlights the central argument focusing on the delimiting factors underpinning the marginalisation of the rural poor and the argued failure of the rural project. It also spells out the logic and assumptions that drive the research strategy.
1.4.1 Background to the Logic
The central argument of this thesis, also highlighted by the World Economic and Social Survey (UN 2005b), is that developing countries will not provide a better quality of life for their entire people unless the spiral of deprivation among the rural poor is broken. This argument is premised on the logic that the spiral of deprivation is an outcome and measure of the functionality (or dysfunctionality) of the macro- and micro-frameworks influenced by the reigning regimes. These frameworks in turn influence the structure and governance of socio-economic and ecological systems, institutions, the delivery machinery, as well as the performance of targeted initiatives and programmes. The relevance of this argument for South Africa is demonstrated by the findings of the UNDP Human Development Report 2010 (UNDP 2010). The Report points to life expectancy that fell below 1970 levels with South Africa ranking 110th in terms of economic and physical well being. This is despite growth and material prosperity in recent years.
The concept of the “spiral of deprivation” primarily draws on Chambers’ variety of interlocking disadvantages which trap the rural poor in states of deprivation (Chambers 1983, 1989; Warren 1985). Chambers has used terms such as “The Deprivation Trap”, “The Poverty Trap” “The Vicious Circle of Poverty”, etc. In his book Rural Development: Putting the Last First (1983) he refers to the five clusters of disadvantage that interact with each other to trap people in a situation of disadvantage. They are powerlessness, physical weakness, isolation, vulnerability and poverty. Significant here is Chambers’
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call for academic pluralism and the synthesis of social and physical explanations of rural poverty. Discussing “The Paradox of Poverty”, Chambers, Saxena and Shah (1990) identify the priorities of the poor as survival, security and self-respect. This study commends Chambers’ efforts for deepening understanding on the plight of the rural poor. However, the limited focus on survival and what Maslow (1943) terms as “deficiency needs” has not assisted in addressing the structural impediments to economic participation and the causal factors responsible for institutionalised inequality. The deficiency needs according to Maslow’s “hierarchy of needs” encompass basic life needs (food, shelter), safety, belonging and esteem needs, excluding self-actualisation which is about growth and fulfilment. While these needs are essential for all, particularly in addressing absolute poverty, the exclusion of wealth creation and other productive assets critical for improved quality of life creates a residual problem of relative poverty (defined later). This gap is visible in the narrowly focused state intervention for the indigent using social transfers based on neoliberal trickle-down policies, ignoring the structural aspects of marginalisation, poverty and inequality. This also extends to responses by donors and NGOs who tend to focus on minimum resources for subsistence resulting in unsustainable micro-projects (Ashley & Maxwell 2001).
The researcher’s preferred characterisation of the “spiral of deprivation” draws from what Martin and Osberg3 (2007:35) refer to as the “unjust equilibrium that causes the exclusion, marginalization, or suffering of a segment of humanity that lacks financial means or political clout to achieve any transformative benefit on its own”. The preference, however, is to broaden the “lack of financial means” to “capability inadequacy”, that is, beyond income poverty (Sen 1999). The lack of “political clout” should also include “social clout” as the study notes that patriarchy is at the core of rural marginalisation, which discriminates against women, who bear the brunt of vulnerability, unpaid labour and the burden of care. Important as well is the reference to “unjust equilibrium” resonating with the researcher’s argument of a disadvantaging or disempowering macro-environment (or oppressive regimes) with a deliberate intent to exclude and marginalise (as indicated by the problem statement). Figure 1 illustrates the spiral and draws attention to global implications and local impact. The global implications stem from placing rural economic activity within a global context. Stiglitz (2002) asserts: “The West has driven the globalization agenda, ensuring that it garners a disproportionate share of the benefits, at the expense of the developing world” (2002:7). However, it is important to emphasise that the roots and impact of deprivation are localised. Therefore, breaking the spiral requires action at both local (including national and regional) and global levels.
3 The latter forms part of the authors’ definition of social entrepreneurship which is about identifying and addressing such a situation, discussed later in the thesis.
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Inequality Poverty Vulnerability Rural Poor Marginalization Local ImpactGloba
l
Im
pli
ca
tions
Figure 1: The Spiral of Deprivation
Source: Derived from Chambers (1983, 1989)
1.4.2 Key Assumptions and Related Arguments
Following on the above logic, this section unpacks the key assumptions and related arguments. At the core is the attribution of structural marginalisation and exclusion of the rural poor to disempowering macro-frameworks. The discussion on disempowering frameworks focuses on the problematic macroeconomic framework argued to have been influenced by the brutal and oppressive political economies of colonialism and apartheid (Chapter 4). The argument extends to what is viewed as the myopic continuation with neoliberal policies post-apartheid, characterised by an economy that is severed from social realities. The macroeconomic framework is blamed for propagating an unequal and welfarist development agenda with the majority of the rural poor depending on social grants4 perpetuating what this thesis terms “dependent survivalism”. The critique focuses on the insufficiency of the macroeconomic framework and its strategies in addressing poverty, inequality and underdevelopment in rural areas. This touches on the overarching goal of development and the critical link between economic systems and inclusive, sustainable wellbeing.
4 According to the Presidency 2009 Development Indicators Report of March 2009, just over 13 million people received social grants, and 5,5% of GDP is spent on social grant assistance (Presidency, 2009). This number was reported to have increased to approximately 15 million people in 2011 (Gordhan 2011).
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This thesis views macroeconomics beyond price stability, as the study of whole economic systems aggregating over the functioning of the individual economic units (with focus on rural economic units). According to Black, Hashimzade and Myles (2009) macroeconomics is concerned with the
macro aspects of economics, concerning the determination of aggregate quantities in the economy. Macroeconomics considers what determines total employment and production, consumption, investment in raising productive capacity, and how much a country imports and exports… It is contrasted with microeconomics, which is concerned with disaggregated quantities, such as the incentives operating on individuals and firms in the economy, the organization of production and the distribution of incomes (p275).
The argument here is that the macroeconomic models are not built on the basis of reality-based microeconomic foundations. The study proposes the restructuring of the macroeconomic framework to be driven by reality-based and inclusive macro and microeconomic policies with emphasis on effective mainstreaming of the rural households. Black et al. (2009) define macroeconomic policy as a “normative counterpart of macroeconomic theory aimed at assessment of the state of the economy and prescription of practical ways of improving its performance” (p274). According to them macroeconomic policy tools used by government include monetary policy, fiscal policy, debt management policies, sometimes prices and incomes policies (e.g. regulated prices and minimum wage). Chapters 3, 4 and 6 provide a more detailed theoretical background to this argument.
Of great concern to this study is the dependent survivalism of the rural households surrounded by potentially valuable natural resources. Dependent survivalism in this context refers to the status of perpetual dependence of the rural poor, barely surviving as beneficiaries of the insufficient and unsustainable aid from the state and donors, forced to operate at the margins of the market economy. The argument is that their reality is excluded and constrained by the neoliberal market economic system. The system reduces them to servicing privileged private sector interests in an unfair business environment that favours the privileged (Harvey 2005). The argument here is that the rural poor can participate and benefit as value chain actors in the production and supply of value-added natural resources if an alternative inclusive, sustainable benefit-maximising economic system is introduced. This recognises that while having productive potential the rural poor are entrapped in an unjust equilibrium with institutionalised inequality, environmental degradation and unsustainable development (Cousins 1999; Laker 2005).
This study deals with dependent survivalism as a symptom of the spiral of deprivation. Therefore approaches for breaking the spiral commence with the problematisation of the neoliberal paradigm, its macroeconomic framework, and the current rural development paradigm. Rural development is
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discussed in more detail in Chapters 3-6. According to Turner (2008), neoliberalism is an ideology that favours economic policies based on neoclassical theories of economics. According to him, these policies minimise the role of the state and maximise private business sector, emphasising fiscal discipline and business-friendly exchange rates. Harver (2005) argues that neoliberalism is a means to restore power to the rich and make the poor poorer. Neoliberalism policies, blamed for the failed Washington Consensus (Williamson 1990), continue to drive the global economic systems and economic policies of both developed and developing countries.
The neoliberal policies and strategies include trade liberalisation, privatisation, commoditisation, financialisation, the management of crises and state redistributions (Harver 2005). Their negative impact on the poor (real or perceived) has become the agenda of social justice movements and trade unions globally. They are the reason behind anti-poverty protests in world trade, G8 and G20 gatherings annually (Bhagwati 2007; Stiglitz & Charlton, 2005). The critique includes the management or “manipulation” of crises to impose fiscal discipline that results in joblessness and the reduction of social spending with negative impact on the rural poor (Mahlati 2009). Another contributing factor to the exclusion and disempowerment of the deprived poor that has not been adequately addressed in literature is the financialisation of the global economic system. According to Foster (2007), “financialisation” refers to the shift in the weight of economic activity from production to finance. The financialisation of the economic system in an environment of peasant households with poor access to financial capital and holders of “dead assets” (undervalued or worthless) (de Soto 2000), strengthens the problematisation of the macroeconomic framework. Of further concern are the deteriorating production conditions in communal rural areas with poor productivity (IAASTD 2008).
As the first argument related to problem definition, focus now turns to the study objective of offering alternative strategies for breaking the spiral of deprivation. This emphasises that establishing sustainable rural economic development programmes requires structural reform (policy and institutions) that is based on an agenda-setting and cross-cutting inclusive and sustainable development framework. This framework prioritises enabling policies and institutions for enhancing capabilities and leveraging rural-based assets using value chains to improve the performance of, and mainstream rural household production, termed the “productivist or productive perspective” (covered in Chapters 6-8).
The productive perspective views the rural poor beyond just grant beneficiaries, consumers and a source of labour. It takes a broader perspective to the production function as covered in the conventional productivity definition5 which is confined to income earning with a reductionist focus on
5 Productivity SA defines productivity as the “efficiency with which inputs of capital and labour are used” (Productivity SA 2009).
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labour productivity. The conventional definition emphasises a narrow focus on competition and corporate or sector performance (Nickell 1996, Söderbom & Teal 2001). The proposed productive perspective draws from the sustainable livelihood approach as it focuses “on people, their assets and activities, rather than sectors and their performance” (Ellis in Carney 1998:63). The inclusion of value chains is designed to connect people/assets/activities to relevant industry sectors with improved performance so that household producers and suppliers are enabled to operate as value chain actors in the mainstream economy. Chapters 5-7 use the marula case study findings to highlight problems with transactional governance and institutional arrangements whilst presenting alternative strategies. The analysis draws strongly from the new institution economics (NIE) literature (Coase 1937; Williamson 1985; North 1986, 1990).
Central to proposed restructuring and the alternative offering is the conception of household production (Chapter 3 and 6). This relates to the consideration of reality-based microeconomic foundations for the macroeconomic framework restructuring highlighted above. Gronau (2008) indicates that home production, even in modern economies, constitutes about one-third of the gross national product even though home output is not traded in the market. The conceptualisation considers Becker’s household production model (Becker 1965, 1991; Pollak 2002), but is not limited to economic theories. It takes a transdisciplinary approach drawing from feminist and other social and development sciences (Elson & Catagay 2000; Braunstein 2007; Collas-Monsod 2007; Carney 1998; Scoones 1998; Moser & McIlwaine 1997; Moser & Felton 2007). This is because household production has strong gender and family dimensions, with household assets being critical for sustaining livelihoods and productivity.
The reference to assets goes beyond “assets as a buffer against vulnerability” (Moser & McIlwaine 1997; Chambers 1983). It focuses on “asset-based empowerment”. This construct is explained in Chapter 6. The approach draws lessons from the marula case study and secondary research. The latter includes assertions that poor asset endowments entails an equity issue, but also may mean that the poor may not be able to use their own assets as efficiently as the rich may (Mendola 2007). Critical here is that the overall thesis thrust (problem and objectives) rests on the view that fundamental flaws and changes in the economic system are endogenous results of social struggles and economic exigencies (Braunstein 2007; Bookchin 1996). This argument forms the basis for challenging the reductionist view of the marginalisation of the poor as just a market failure problem. The latter is linked to the old and ongoing state versus market discourse (Meier & Stiglitz 2001). Yunus (2008) also challenges the market failure notion and argues that the problem is not market failure but conceptualisation failures. The latter refers to the failure to capture the essence of a human being in economic theory. Mendola (2007), in his attempt to explain the root causes of inefficient farm household behaviour, links market failure to “a behavioral response to risk, which is exacerbated by inequality and poverty” (2007:54). Braunstein (2007) adds a useful gender perspective highlighting the problem of viewing market imperfections and
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institutions as exogenous. This takes into cognisance the organisation of nonmarket institutions with property rights that systematically exclude women or structure male advantage in capital markets, as well as women socialised to take on a greater share of the costs of social reproduction (2007:15). She cites Folbre (1994) who points to the heterodox feminists’ argument that power, coercion, conflict and cooperation based on structures of gender, age, race, and class operate at all levels of the economy – the family, the community, the market, the firm and the state. Braunstein (2007:15) argues that
Institutions are not just about coordinating individuals and groups, but they also reflect the exercise of self-interest…So market structures and institutions may be inefficient from the perspective of maximizing total production, but efficient from the perspective of maximizing a certain share of production. Seeing the linkages between the economy and institutions in this way admits the possibility that the evolution and persistence of gender inequality is about the interplay between market incentives and social structures of power and cooperation… Now gender inequity is both cause and result; we are no longer limited to the language of imperfect markets or exogenous institutions.
1.5 DEFINITION OF KEY CONCEPTS AND SCOPE
The arguments above point to the centrality of the rural household as a foundation for sustainable development. Chapter 3 provides a definition of sustainable development. As indicated in the preceding discussion, the study proposes an inclusive approach that uses value chain strategies to mainstream the marula household producers and suppliers. Mainstreaming here is defined as an integrative transformational strategy, which concerns itself with addressing the discriminatory consequences of policies and practices that cause and/or perpetuate structural and systemic marginalisation. Central is gender mainstreaming. According to the European Union (EU 2005:12) gender mainstreaming
is a strategy aimed at achieving gender equality. It concerns planning, [re]organisation, improvement and evaluation of policy processes, so that a gender equality perspective is incorporated in all development policies, strategies and interventions, at all levels and all stages by the actors normally involved therein.
Gender equality means that “all human beings are free to develop their personal abilities, and make choices without the limitations set by strict gender roles; that the different behaviour, aspirations and needs of men and women are considered, valued and favoured equally” (EU 2005:10). Of importance is the differentiation between gender equality and gender equity. UNDP (2007:4) defines gender equity as the process of being fair to men and women with equity a means and equality the result. The
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mainstreaming agenda here is based on a rights-based approach and draws on Sen’s (1999) notion of development as freedom and enhancement of human capability.
As highlighted in sections above, the unit of analysis and targeted impact area is the rural or peasant household primary producer. Steyn et al. (2002:49) define a household as
all the people who live together and who make joint decisions or who are subjected to others who make such decisions for them. A household can consist of an individual, a family, any group of people who have a joint income and take decisions together.
The focus on peasant households recognises that they constitute a large percentage of the poorest of the poor and vulnerable even though they possess entrepreneurial capability (Woolard 2002; PCAS 2008b). Mendola (2007) highlights that peasant farm households account for no less than a quarter of the world’s population with most in developing countries, where they can represent up to 70 percent of the national population.
The use of the term “peasant” is deliberate to emphasise the inequalities and dualism still pervasive in South Africa’s “sophisticated” economy. South Africa, as the rest of the Western countries, has and continues to follow a predominantly capitalist system6 with the co-existence of differentiated modes of social and economic organisation and activity. The Institute for Futures Research (2007) shows that the South African economy matches the profile of the average upper middle income economy and, in some cases, shares the features of high-income economies. However, the peasant typology as defined by Ellis (1993, 1996) still exists. Ellis (1996:15) defines peasants as “farm households only partially integrated into imperfect or incomplete markets. The dual aspect of this definition is the semi-subsistence basis of peasant survival and imperfect nature of the markets for farm outputs and inputs”. It is, however, important to emphasise that the study focus group is not homogenous, and covers various income and living standard measure (LSM7) groups engaged in household production for
6 Also known as capitalist market economy, market economy, free enterprise economy prevalent in First and Third World countries excluding centrally planned economies that have since shifted as well. Capitalism is defined as an economic system characterised by private ownership of the factors of production, and decentralised decision-making by the owners of the factors of production. Decisions are coordinated by the market mechanism (Mohr, Fourie & Associates 2002).
7LSM is a categorisation ranging from 1 to 10 used to measure household assets and aspects of consumption patterns (SAARF 2009). According to the 2009 Development Indicators (Presidency 2009), the average income per month in RSA (2007/2008) in LSM 1-3 is R1000 to below R2000, LSM 4-6 above R2000 to R5000, LSM 7-9 above R5000, LSM 10 R20 000 and above.
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income generation (subsistence), self-employment, and/or entrepreneurship (Chapter 5). The research approach factors-in both the structural/institutional context and transactional aspects of institutions. Matsaert (2002:2) defines institutions as “organizations or sets of conventions, policies or legislation which regularize social behaviour. Institutions operate at all levels from the household to the international arena and in all spheres from the most private to the most public”. She views institutional context as “transforming structures and processes”. D’Haese, Vink, Van Huylenbrock, & Kirsten (2003:20-25) cite Davis and North (1971) who make a distinction between the institutional environment and institutional arrangements. According to them, the institutional environment refers to the set of fundamental political, social and legal ground rules that establish the basis for production and distribution. The institutional arrangements, conversely, are the arrangements between economic units that govern the way in which these units can cooperate and/or compete; they are the contracts or arrangements setup for particular transactions.
In terms of scope, the research focuses inquiry on the continuous marginalisation of the rural poor households and the persistence of poverty and inequality in an environment of economic growth with budget surplus and political freedom since the dawn of the democratic era in South Africa, 1994 (PCAS 2008a&b). The period8 of inquiry precedes the 2008/9 global crisis but the analysis and conclusions obviously take this crisis into account. The concepts of marginalisation, vulnerability, poverty and inequality are defined below to put the spiral of deprivation into perspective and assist with reality-based solutions.
According to Chambers Concise Dictionary (2004), marginalisation or to marginalise means, “to push something or someone to the edges of anything, in order to reduce its or their effect, relevance, significance, etc.” Marginal refers to “small and unimportant”. Chambers (1983, 1989) associates marginalisation with isolation and powerlessness, and a form of deprivation. In Voices of the Poor, Narayan, Chambers, Shah and Petesch (2000) provide a better understanding of marginalisation as they describe that which is “Keeping Poor People Powerless”, using “The Many-Stranded Web” (2000:247). This Web includes precarious livelihoods with few assets, seasonal and inadequate;
8 A Government statement (Presidency 2007) indicated that South Africa experienced continuous economic
growth for eight years – faster than the country’s population, with capital investment that increased from 15% of GDP in 2000 to 19% of GDP in 2007. A survey by the South African Institute of Race Relations (2006-7) released in November 2007 (SAIRR 2007) indicated that inequality among blacks is rising faster than among any other population groups. Among Africans inequality had grown 20% since 1996, 17% in coloureds, 6% in Asians, and decreased by 2% among whites. The survey showed that inequality was highest in provinces with large poor or rural populations, such as Eastern Cape, KwaZulu Natal, Limpopo and Mpumalanga. Eastern Cape and Limpopo had the highest inequalities amongst blacks.
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isolated, risky and un-serviced places of the poor; unequal gender relations; weak and disconnected organisations of the poor; abusive behaviour of those more powerful; disempowering and excluding institutions; and poor in capabilities.
Vulnerability on the other hand is associated with defencelessness, insecurity and exposure to risk. Vulnerability according to Chambers refers to
exposure to contingences and stress, and difficulty in coping with them. Vulnerability thus has two sides: an external side of risks, shocks, and stress to which an individual is subject: and an internal side which is defenselessness, meaning a lack of means to cope without damaging loss (1989:1).
Devereux (in Ashley & Maxwell 2001:507-519) argues that risk, uncertainty and vulnerability are the key features of livelihood insecurity. According to him, “[l]ivelihood insecurity is implicit – as the antithesis of ‘sustainability’” (p. 507). Devereux believes that livelihood insecurity is not just a symptom of poverty, but a contributory cause. “Since vulnerability is correlated with lack of assets, any developmental intervention that increases the poor’s control over assets will indirectly enhance livelihood security” (p. 516).
The International Strategy for Disaster Reduction (ISDR) defines vulnerability as the set of conditions and processes resulting from physical, social, economic and environmental factors that increase the susceptibility of a community to the impact of hazards (UN/ISDR 2004:302). This includes the adverse effect of climate change. Vulnerability is thus associated with the predisposition of a system, a process, an institution, a community or country to be affected when a natural event manifests itself.
Poverty has been a topical issue and focus of the developmental discourse, with diverse definitions. The main consensus however, is its multidimensional nature and the differentiation between absolute and relative poverty (World Bank 1975, 1997, 2000). Absolute poverty refers to households that are unable to meet basic needs for survival. Relative poverty is generally perceived to be a household income level below a given proportion of average national income (Sachs 2005).
Since 1994, the democratic South African government has invested in fragmented poverty relief initiatives without a clear definition of poverty or a clearly spelt out poverty reduction strategy. Only in September 2008 was a draft Anti-Poverty Strategy launched by the Presidency, following the release of development indicators in July 2007. The draft strategy indicates that poverty is defined as a deficiency in an individual’s socio-economic capabilities, with dimensions that include income, access to assets, access to basic services, social capital and networks (PCAS 2008c:4). It emphasises the linkages
